Correlation Between CSIF III and CS Real

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Can any of the company-specific risk be diversified away by investing in both CSIF III and CS Real at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CSIF III and CS Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSIF III Eq and CS Real Estate, you can compare the effects of market volatilities on CSIF III and CS Real and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CSIF III with a short position of CS Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSIF III and CS Real.

Diversification Opportunities for CSIF III and CS Real

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between CSIF and SIAT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CSIF III Eq and CS Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS Real Estate and CSIF III is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CSIF III Eq are associated (or correlated) with CS Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS Real Estate has no effect on the direction of CSIF III i.e., CSIF III and CS Real go up and down completely randomly.

Pair Corralation between CSIF III and CS Real

Assuming the 90 days trading horizon CSIF III Eq is expected to generate 0.77 times more return on investment than CS Real. However, CSIF III Eq is 1.3 times less risky than CS Real. It trades about 0.09 of its potential returns per unit of risk. CS Real Estate is currently generating about 0.04 per unit of risk. If you would invest  126,442  in CSIF III Eq on October 15, 2024 and sell it today you would earn a total of  43,415  from holding CSIF III Eq or generate 34.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.59%
ValuesDaily Returns

CSIF III Eq  vs.  CS Real Estate

 Performance 
       Timeline  
CSIF III Eq 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in CSIF III Eq are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, CSIF III is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
CS Real Estate 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in CS Real Estate are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal basic indicators, CS Real may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CSIF III and CS Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CSIF III and CS Real

The main advantage of trading using opposite CSIF III and CS Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSIF III position performs unexpectedly, CS Real can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CS Real will offset losses from the drop in CS Real's long position.
The idea behind CSIF III Eq and CS Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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